Under IAS 32, financial assets and financial liabilities can be measured using either amortized cost or fair value, depending on the nature of the instrument and the entity's business model.

Amortized cost is a method of measuring financial assets and financial liabilities that takes into account the expected future cash flows of the instrument, discounted at the effective interest rate. Amortized cost is generally used for instruments that are held to maturity and have fixed or determinable payments.

Fair value, on the other hand, is the amount at which the instrument could be exchanged in an arm's length transaction between knowledgeable, willing parties. Fair value is generally used for instruments that are held for trading purposes, or for which fair value provides a more relevant measurement than amortized cost.

Here's an example to illustrate the difference between amortized cost and fair value measurement:

Suppose a company holds a bond with a face value of $1,000 and a maturity of 5 years. The bond has an annual interest rate of 6% and pays interest annually. The bond is issued at par, so the initial measurement of the bond asset is also $1,000.

If the company holds the bond to maturity and intends to collect the contractual cash flows, the bond would be measured at amortized cost. Using the effective interest method, the carrying amount of the bond asset would be adjusted each year to reflect the interest income earned and any principal repayments made. For example:

If, on the other hand, the company holds the bond for trading purposes, the bond would be measured at fair value. Suppose that at the end of the first year, the fair value of the bond is determined to be $1,050. The bond asset would then be adjusted to reflect the change in fair value, with the gain of $50 recognized in profit or loss. In subsequent years, the fair value of the bond would be adjusted to reflect any changes in market conditions or other factors that affect the price of the bond.

In summary, the use of amortized cost or fair value measurement depends on the nature of the instrument and the entity's business model. Amortized cost is generally used for instruments that are held to maturity and have fixed or determinable payments, while fair value is generally used for instruments that are held for trading purposes, or for which fair value provides a more relevant measurement than amortized cost.